Very sparse pickings among cases published in the last two days. But here is what is available. The good side is that there may be more of interest to drafters than usual.
Commencement of statute of limitations; LMRA
Communications Workers v. Bellsouth Telecommunications, LLC, 2021 U.S. App. LEXIS 11354 (11th Cir. April 20, 2021) is primarily of interest to those handling labor arbitrations, as the court considers the statute of limitations for a union seeking to compel arbitration under the Labor Management Relations Act. Georgia state law, which the court applies, requires that the party seeking to compel arbitration commence an action within six months of the date “when one party unequivocally refuses to arbitrate the dispute.” The District Court held that the union failed to meet that deadline and granted summary judgment in favor of defendant, thus denying arbitration. The Court of Appeals, in a per curiam opinion by Judges Newsom, Luck and Anderson, reverses. The parties had exchanged a string of emails discussing arbitration. While the District Judge looked to an early email from BellSouth stating that “it didn’t believe the grievance could be arbitrated under the collective bargaining agreement” as the commencement date for the running of the statute of limitations, the Court of Appeals considers the parties’ string of communications to be merely an exchange of thoughts over timing and other issues and that “the parties could return to arbitration in the future if their discussions were unsuccessful.” Therefore, the court holds, there was no “unequivocal” refusal by the Company arbitrate, only a potential delay; the union’s application to compel was, accordingly, timely.
Employee handbooks and arbitration clauses
Glazier v. True North Energy, LLC, 2021 U.S. Dist. LEXIS 74257 (E.D. Mich. April 19, 2021) is illuminating to those drafting H.R. policy handbooks and who want to mandate arbitration of disputes between employer and employee. Plaintiffs alleged that defendant failed to pay them overtime in violation of the Fair Labor Standards Act. True North moved to compel arbitration under the provisions of a dispute resolution process contained in its employee handbook. The court, Leitman, J., denies the motion, holding that the handbook did not create a contract between employer and employee. In fact, the court holds, the “Handbook expressly disclaimed the creation of any binding obligations” (Emphasis in original). Further, Judge Leitman opines, because the company reserved the right “in its sole discretion, [to] modify or vary from anything stated in the [Handbook], with or without notice. . . ,” any purported agreement to arbitrate was merely “illusory.” Finding no agreement to arbitrate, the court denies defendant’s motion to compel. It distinguishes authorities in which the arbitration clause was contained in a separate document or in which the handbook contained “no express language that its terms [were] not intended to create an enforceable agreement” (Brackets in original).
FAA preemption of state prohibitions against arbitration
Wyche v. KM Systems, Inc., 2021 U.S. Dist. LEXIS 74887 (E.D.N.Y. April 19, 2021) is one more case holding that New York’s statute prohibiting mandatory arbitration of discrimination claims, CPLR § 7515, is preempted by the FAA. The decision by Judge Matsumoto contains a useful list of other decisions so holding.
Three-month limit for a motion to vacate an award
Quest International Monitor Service, Inc. v. Rockwell Collins, Inc. 2021 U.S. App. LEXIS 11402 (9th Cir. April 20, 2021)(Smith and Ikuta, Circuit Judges, and Vratil, District Judge sitting by designation) reaffirms the three-month window established by Section 12 of the FAA for serving an application to vacate an arbitration. In doing so, the court specifically rejects any reliance upon state law statutes of limitations under the Erie doctrine.
Inclusion of employees under an arbitration clause
For those reviewing and redrafting their arbitration agreements, Lopez v. BMW Tech. Corp., 2021 U.S. Dist. LEXIS 74215 (N.D. Ill. April 19, 2021) counsels thinking broadly about those whom you wish to receive the benefit of the clause and phrasing it accordingly. Lopez worked for Creative Circle, an employment staffing firm. She was assigned to BMW Technology, a Creative Circle client. As part of her contract with Creative Circle, Lopez executed an arbitration clause which encompassed claims against “Creative Circle, LLC, its affiliates, subsidiaries, parent company and clients with which Employee is assigned or employed.” Lopez alleges that a BMW executive, Reuter, struck her while at a company outing; when she complained, BMW announced she would no longer be working there and Creative Circle did not give her any alternative placement, effectively terminating her. She sued BMW, Creative Circle, and Reuter, but referred the BMW and Creative Circle claims to arbitration. Reuter move to compel arbitration of the claims against him, basing his argument on the arbitration agreement between Lopez and Creative Circle. Judge Kennelly denies the motion to compel, holding that the arbitration clause extends only to BMW, not to BMW’s employee, Reuter, as his employer, not he, was Creative Circle’s “client.” “It would have been relatively easy to include language in the contract extending its benefits to employees or agents of clients, but there is no such language. Reuter’s contention would require adding terms to the contract, which is not how contracts are appropriately read.” Those drafting arbitration agreements may be well-advised to specifically include the “employees” of any third-party beneficiaries if they want to be sure to encompass them within the ambit of arbitration.
There is an interesting and, considering the pendency of Servotronics v. Rolls-Royce before SCOTUS, timely article on the history and underlying public policy of 28 U.S.C. § 1782 in the current edition of the always-great ABA Litigation Section magazine, Shapiro, “Statute without a Home,” 47 Litigation No. 3 (Spring 2021). Whether or not one agrees with the author’s conclusions, it is a good read.
Hopefully, there will be some more meat for these bones on Friday. See you then.
David A. Reif